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examination and statement of accounts and of other documents connected with accounts by persons who have had no part in their preparation. Systems of financial inspection have long been used, especially in connection with public accounts. In Italy the elaboration of commerce considerably increased the duties of an auditor in the late Middle Ages, but the auditing of business accounts did not become common until the 19th cent., when there were an increasing number of businesses continually growing in size and complexity. Corporate charters usually came to be granted only on condition that licensed experts conduct annual audits. Such audits are particularly useful to the owners (partners or stockholders); executives (managers, officers, and directors); creditors or prospective creditors (investors, note brokers, and commercial and investment bankers); and receivers, trustees, and creditors' committees of a business. Audits are also useful to the vendors of a firm's merchandise, the owners of patents and other recipients of profit shares or royalties, governmental regulatory bodies, and prospective donors to institutions. An audit settles certain categories of questions. It must determine whether all assets and liabilities shown are actual, and that they are properly incurred, valued, and recorded. A check must be made of the surplus, income, and capital-stock accounts, verified by the examination of the authorizations for stock issues and by comparing the amounts issued with the amounts authorized. Finally, auditing constitutes an independent check on the tendency to overstate assets and understate liabilities. The duties of auditors have even expanded into a comprehensive survey and analysis of the entire conduct of the financial and accounting branches of an enterprise. Thus the auditor needs, in addition to his knowledge of accountingaccounting,
classification, analysis, and interpretation of the financial, or bookkeeping, records of an enterprise. The professional who supplies such services is known as an accountant. Auditing is an important branch of accounting.
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, a broad understanding of business and finance. The accountant records the facts of a business; the auditor must determine whether or not such recording has been done accurately and honestly and then interpret and judge the facts, perhaps adding to his report recommendations for the future conduct of the business. In many countries, auditors are now established as a separate profession, requiring government licensing. In the United States, private audits are usually performed by certified public accountants; auditing of the federal government's accounts is conducted by Congress's Government Accountability Office (GAO). Formerly the General Accounting Office, it was established in 1921. The Internal Revenue Service periodically audits individual and corporate tax returns. The Public Company Accounting Oversight Board (established 2002) registers and regulates accountants and accounting firms that act as auditors.


See H. F. Stettler, Auditing Principles (3d ed. 1970); A. W. Holmes, Auditing (7th ed. 1971); V. B. Bavishi, International Accounting and Auditing Trends (1989); T. A. Lee, ed., The Evolution of Audit Thought and Practice (1989).

References in periodicals archive ?
Luis Gutierrez (D-IL) commissioned the probe by the General Accounting Office, the investigative agency of the US Congress.
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General Accounting Office (GAO, 1996a) would seem to agree:
General Accounting Office finds no agreement on how to evaluate the success of these activities in curbing wetlands loss.
Based on the experience of numerous countries that have made a comparable substitution, as reported by the General Accounting Office, the government can expect to issue at least twice as many $1 coins as it would have issued $1 notes.
A United States General Accounting Office report, "Canadian Health Insurance: Lessons for the United States," further describes the Canadian-style single-payer system as such:
In accordance with federal regulations, upon the filing of the protest with the General Accounting Office (GAO), the Navy instructed TIK to suspend its efforts on the contract until the matter is resolved by the GAO.
In 1999, the General Accounting Office (GAO) denied a protest from Encore Management Company (see B-278903.
Charles Grassley (R-Iowa), chairman of the Senate Finance Committee which oversees federal child-support enforcement--ordered the General Accounting Office to examine the problem of undisbursed child support.

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